After ending last week priced at $7.29 a share, Village Roadshow Ltd (ASX: VRL) jumped an impressive 6.7% and is now trading at $7.78. This was a fantastic performance given that the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) rose just 0.4%.
Although the stock has risen in price, it is by no means too late for investors to climb aboard. Here are five reasons why:
1. Incredible Returns. Village Roadshow has proven itself to be a consistently strong performer over the last five years. In that time, it has climbed from just 88c to record a high of $8.05 in December last year. That's a return of 815% or an annual average gain of roughly 67%.
2. Room to Run. The gains have been impressive, but they're not finished yet. While Village Roadshow currently operates theme parks in Australia (Wet 'n' Wild, Sea World, Movie World) and the US, it is also expanding into the enormous Asian market. This should prove incredibly beneficial to earnings.
3. Copyright laws. Village Roadshow also operates nearly 700 cinemas around the world and is involved in various film productions, leaving it exposed to piracy. Given that Australians are amongst the world's top pirates, the Australian government is intending to make "significant amendments" to copyright laws which will greatly benefit Village Roadshow.
4. Higher fees. Speaking of cinemas, Village charges significantly higher prices to see a movie than most smaller operators. While this could lose them business in some cases, their cinemas are usually found in more convenient or more iconic locations (for example, at major shopping malls), which will continue to attract large crowds regardless of the price charged.
5. Dividends. To make the investment case for Village Roadshow even stronger, the stock offers a fat, fully franked 3.9% dividend yield. Who could ask for more from a company with such strong growth prospects?
An even better bet than Village Roadshow
Village isn't the only stock I have my eye on from the leisure industry. I am also keen on Crown Resorts Ltd (ASX: CWN) and fellow theme park operator Ardent Leisure Group (ASX: AAD).
